• Australian 10-year bond yield hits 8-month low after July employment change disappoints; solid jobless rate caps losses

    Source: FxWire Pro - Commentary / 15 Aug 2018 23:47:15   America/New_York

    Australian long-term government bonds gained on Thursday after fall in  July employment change disappointed investors, but 6-year low jobless rate supported the short-term yield curve. However, Turkey was the main focus for markets with emerging markets feeling contagion pain.

    The yield on Australia’s benchmark 10-year Note, which moves inversely to its price, fell 1 basis point to 2.563 percent, the yield on the long-term 30-year Note also dipped 1 basis point to 3.060 percent and the yield on short-term 2-year rose 1 basis point to 2.005 percent by 03:20 GMT.

    Australia’s seasonally adjusted number of persons employed decreased by around 4,000 persons in July 2018. The seasonally adjusted unemployment rate decreased to 5.3 percent and the labour force participation rate decreased to 65.5 percent, according to the latest figures released by the Australian Bureau of Statistics (ABS) today.

    "Over the year to July, the unemployment rate declined by 0.2 percentage points. This continues the gradual decrease in the trend unemployment rate from late 2014 and is the lowest it has been since 2012," said the Chief Economist for the ABS, Bruce Hockman in the press release.

    The ANZ reported that overall though they continue to point to ongoing gradual improvement in the labour market in the near term, with a further decline in the unemployment rate. Ongoing improvement in the labour market is critical to the outlook for wages growth and the eventual return of inflation to the mid-point of the RBA’s 2–3 percent target band.

    In the United States, the Treasury yields remained lower following ongoing global trade crises, but 2-10 year curve declined to 23 basis points - narrowest since the global financial crisis of 2007-08.

    "The weaker risk environment continued to be supportive of safe-haven government bonds, sending yields lower (yields move inversely to prices). US 10-year yields fell 4 basis points to 2.86 percent. Positive US economic data overnight, however, may have prevented yields from falling further," said St. George Bank in its morning note.

    Meanwhile, the S&P/ASX 200 index traded 0.64 percent higher at 6,280.5 by 03:30 GMT, while at 03:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -39.95 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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